house is one of the biggest assets in many divorces and, as a result, it’s one of the first places we start poking around. We need to know, for example, what’s remaining on the mortgage, what condition the house is in, what it’s appraised value might be, and so on, all to help us determine how much equity might really be there.
If you’re like most married couples, you bought the house together, and both of your names are on both the mortgage and the deed. More on this in a minute; first we’re going to talk about what happens in abnormal cases where both names are not on the mortgage and deed. That’s not always the case, though. (Almost nothing is ever always the case!)
My name isn’t on the mortgage.
If your name was left off the mortgage—that’s great! If you don’t contribute any money towards the mortgage, the lender can’t come after you. If he stops paying and if, for whatever reason, your name is off the mortgage, no one can force you to pay the mortgage. Of course, it could still get foreclosed, but it wouldn’t hurt your credit if you weren’t the one to default on the mortgage.
My name isn’t on the deed.
Property is marital regardless of title, so if the house was purchased during the marriage and paid for using marital funds, the house is a marital asset anyway.It’s only a little bit trickier if your name isn’t on the deed in the sense that, technically, he could sell or refinance the house without notice to you, since you’re not listed as an owner on the deed. If he does do that, though, we can hold him accountable in court.
My name is on both the deed and the mortgage.
Ok, back to the beginning – you’re like most married people, who have both names on both documents, the deed and the mortgage.
So, when it comes to the house, you have a couple of different options. Most people either sell the house and split the equity somehow, or refinance and one party buys out the other’s interest. It’s possible, too, that the home could be foreclosed, or a short sale could take place, but those are much less common scenarios.
A house is a big decision, so I always advise my clients to think very carefully about what they want to do with it. Never make an emotional, knee jerk decision. Whether you’re able to keep the house is bigger than just whether you can afford to make the mortgage payments. There are taxes, upkeep, and other expenses – like lawn maintenance, a housekeeper, or anything else that you might need to keep the house up. It’s often not cheap.
If you want to keep it, though, I definitely suggest that you talk to a mortgage lender and figure out what your options might be.In order to keep it, or for your husband to keep the house, a refinance is going to be necessary if both of your names are on the mortgage.
A refinance is really the only way to get your name off the mortgage; there’s no other kind of paperwork available to you to get the mortgage out of one party’s name and into the sole name of the other. A refi is going to be absolutely critical.
Obviously, you wouldn’t agree for your spouse to buy out your interest in the house WITHOUT a refinance. There’s no reason that would be okay, because it would still mean that you’re liable for the mortgage payments on the house. If he defaults later, for any reason, the mortgage lender could come after you, even if you don’t live there anymore, and hold you accountable for those payments. If he forecloses, it could damage your credit, too.
Even with an indemnification provision (meaning that you would have a right to act against him if his actions caused you liability – like if he didn’t pay the mortgage and the lender then came after you), you’d have to pay the mortgage up front, and then seek redress through the courts. And, like my mom always said, you can’t get blood from a rock. So, if he’s so broke that he had to foreclose on the house, chances are good he won’t be able to pay you back for expenses you might have incurred as a result.
Getting your name off of the mortgage is critical, and the only way to do that is through a refinance or sale of the residence. A refinance, too, comes with it’s own set of expenses – you’ll have to pay closing costs, for example.
You’ll definitely want to look into the expenses associated with the sale or refinance of your house, and have an open and honest conversation about your options, and what to do with one of the biggest assets in your portfolio.For more information or to talk to one of our licensed and experienced Virginia divorce and custody attorneys, give our office a call at (757) 425-5200.